It’s been a year since open banking and PSD2 went live in the UK. A year on, there are a ton of articles debating whether open banking has been a success. You will hear views like: ‘a slow start’, ‘unlikely to work’, ‘doomed to fail’, ‘no one understands it’, ‘could be groundbreaking’, ‘lots of potential’.
For us at TrueLayer, we are on the side of optimism. We think open banking is revolutionary for financial services and other verticals in the UK and certainly in Europe, because of PSD2. And it is equally evident with jurisdictions further east, including Singapore, HK and Australia, who are looking at the UK’s open banking framework as a benchmark for their own open banking initiatives.
To say nothing of the increase that we have seen week on week of new client signups for access to our APIs; we now have a community of over 3,000 developers building applications on our Data API.
But what has absolutely evolved is the regulatory innovation within the space. As many know, if you operate within the PSD2 spectrum, and offer Account Information Services (AIS) or Payment Initiation Services (PIS), then you need to be regulated by the FCA.
As with every license, there is a period of assessment and analysis to assess a licensee’s suitability for a license. This period could last from three to twelve months. Unless you are regulated you cannot launch or offer your product to the market. Which means that oftentimes, there is an unfortunate delay between the time you are market-ready, and license ready; occasionally it could mean that companies lose the opportunity to publicly launch since they have not got their license.
A possible solution? Become our agents!
This means that in a shorter period of time, you could offer your products to the market on our license. There is an intensive onboarding due diligence and ongoing compliance monitoring programme that you will have to undergo for us to assess the suitability of your business to become our agent. If you pass that, we will be able to appoint you. For the sake of transparency, I would add, we have had to reject more than 50% of applications that were not able to meet the criteria set out in our compliance due diligence process.
While the appointment of agents increases our risk (and that is why we have an ongoing compliance and monitoring programme on our agents), we believe this is an invaluable way to bring innovation to the open banking economy. By supporting companies who are not quite regulatory ready or are awaiting the outcome of their own license application, via an agency model, companies are able to bring their products to market sooner. Consumers get more choice and the industry blossoms with new products and services.
Some of our existing agents are across the product and services spectrum: credit scoring, account aggregation and financial management. The ones in the pipeline: rent verification, expense management, tax services, and personal budgeting.
If you would like to hear more, or apply to become our agent, feel free to email our legal team ([email protected]).
We always felt that open banking was going to change the way businesses operate in the UK, but more importantly, that consumers would get more choice and competition for services and products.
As with all innovation, as much as there is a first-mover advantage or early user adoption, there are also delays and lags. So we are delighted to be able to provide a short term framework that facilitates these companies’ compliant entry into the market, and thus, innovation in the regulatory landscape.